Why the German Slot Tax Is Reducing RTP for Online Casino Players

New rules in the German online casino market are seeing the RTP rate dropping. These rules may have been introduced to give players greater protection, but they have had the noticeable unintended consequence of reducing the return to player rate. 

The German online gambling market is one of the best-protected and regulated in Europe, often hailed as a regulatory example that other countries could follow. It wasn't always this way. Before the current regulatory environment, the Interstate Treaty on Gambling 2021 (Glücksspielstaatsvertrag 2021), the German regulatory environment for gambling was fragmented and varied greatly from state to state. While the new regulatory environment is much better controlled, some of its rules have caused unintended consequences.

German people who enjoy playing online slot games with a no deposit bonus in Germany have found that slot games that they play at home have a lower Return To Player (RTP) rate than if they are played in other European jurisdictions. These slot games literally pay German players less when they win, compared to the same game in other regions.

Let's take a closer look at how the regulatory environment for online gambling has changed in recent years in Germany, and at how and why German players are now getting paid out less for wins in online slot games.

The Changed Regulatory Environment For Online Gambling in Germany

Until mid 2021, online gambling in Germany was not very well regulated. The market was fragmented, and different rules and regulations existed state by state, with some regions having outright bans, some having licensed online providers, and others having no regulations in place whatsoever. The Interstate Treaty on Gambling (GlüStV 2021) changed all of this. It introduced a strong framework for the control and regulation of online casino gaming across the entire nation, with a strong emphasis on player protection and a mandate to reduce the number of illegal operators active in the country.

There are a number of strict rules that the German central gambling authority, the Gemeinsame Glücksspielbehörde der Länder (GGL), mandates that operators must abide by to maintain their licences, including:

• A period of five seconds between spins.
   
• A monthly deposit limit of €1,000.
   
• A Maximum stake of €1 per spin.
   
• Prohibition of features that encourage repeat or quick play, like jackpots and autoplay.

The idea, as you might be able to see, of these features, is to slow down the gameplay loop of online gambling services and to get players to think more critically about what they are doing. However, the thing that has caused the most controversy and has led to a reduction in the RTP is the increased amount of tax on slot wagering.

The Increased Tax on Slots

Germany did not just increase the amount of tax on slot games with the GlüStV 2021; it changed the way that taxes were generated from such games. In most online gambling markets in Europe, if you go to a no deposit bonus casino in Europe you will find that the operator pays taxes based on the profit they generate from their slot games. Germany ruled with the GlüStV 2021 that operators would pay tax based on turnover.

The long and short of this is that operators must now pay tax for every bet that is placed, even if they lose. While the amount of this tax isn't huge, being 5.3% of every stake, it adds up.

How Has This Tax Seen a Reduction in RTP?

Before we explain why the tax has affected the RTP, we should explain what RTP is. Return to Player is a fairly simple concept; it is the total amount of wagered money that players should expect to get back over a certain period of time or out of a certain amount of money. The international standard for RTP rates typically sits between 94% and 97%. The idea is that casinos want to make money, but the games can't be too unfair, and players must win some of the time, so there is a sweet spot for how much is returned to the player.

The changes to how slots are taxed in Germany have heavily changed the math for online casino operators in the country. Because they must pay tax regardless of whether they see a profit on a bet, casinos have adjusted their RTP rates to compensate. Analysts in the German online casino market have stated that operators simply cannot hope to provide RTP rates higher than 94% without seeing a loss, and most operators are likely to be offering RTP rates of 92% or lower.

In essence, the higher taxes on operators have been passed directly to players.

Worse Payouts Than Other Jurisdictions

An interesting side-effect of these changes is that operators that span multiple jurisdictions in Europe have had to alter their offerings specifically for the German market. For some operators, this has meant entirely new games and formats, designed to work with and around the changes in tax. For others, it simply means that players in Germany who engage with the same slot games as players in Sweden will see lower payouts.

The player's response to this has varied. While some are happy to accept the system as one that is there to protect them, others are less sanguine about the changes. Some research into the current online gambling market in Germany has reported that a significant portion of players are playing at unregulated offshore platforms to avoid regulatory restrictions.

Final Thoughts

While Germany has made great strides towards providing its citizens with a well-regulated online casino environment that has fewer grey areas, one that has a strong emphasis on player safety, some detractors argue that it has gone too far with their regulations. It is also not perfect, still having legal grey areas regarding things like betting with cryptocurrency.

While German players might be less confused about whether they can legally bet or not, the quality of the bets they can place seems to have fallen. If the regulatory environment for online gambling in Germany is driving players to seek offshore illegal operators in greater numbers, it would seem that they are not doing as good a job protecting their citizens as they intend.